Daily US Stock Market Fundamental & Technical Analysis

Daily fundamental and technical analysis of the US stock market by full time hedge fund manager and options guru, Master Jason Ng (owner and author of Optiontradingpedia.com). Serving investors daily since March 2006.

Stock Market Analysis

Tuesday, June 22, 2010

Awaiting the Critical Rebound

The Dow pulled back 148 points today as Existing home sales deeply disappoints.

What was an optimistic start for the market today reversed sharply after Existing Home Sales missed estimates by a mile (see Stock Market Calendar). The mixed store sales data did very little to combat the deeply disappointing housing data and with the FOMC announcement coming up tomorrow, investors were traditionally cautious even though the Fed isn't expected to change rates anytime soon. However, we are not surprised at all with the pullback.

Like I said in the beginning of the week, the Dow needs to pullback and retest the 30 days moving average and establish it as a support in order for the bull trend to resume and to complete a reversal of this intermediate neutral trend. The magnitude of today's pullback is strong but with weak volume which does not give it much strength. As such, I would expect the Dow to rebound as soon as tomorrow. The quality of the rebound is going to be extremely important and with a good follow up on Friday, the reversal will be completed.

For now, the Dow remains in a short term bull trend, intermediate neutral trend within a primary bull trend.

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